Under The Radar – 18 March

Source: American Public Power Association via Unsplash

This week we discuss:

1. Net-zero During Wartime

2. Nightmare on Elm Street

3. The Death of Democracy in Myanmar

Net-zero During Wartime

What happened? In a surprising but welcome move, Boris Johnson’s government declared that a massive expansion in solar, wind and nuclear energy infrastructure is needed for national security reasons.

What does it mean?

The government is expected to unveil a radical new ‘energy strategy’ in the coming weeks as the Russian invasion of Ukraine has exposed the UK’s dependence upon overseas energy supplies.

In the same week he visited Saudi Arabia to discuss oil supplies with Mohammed bin Salman, Johnson wrote in the Telegraph  that ‘renewables are the quickest and cheapest route to greater energy independence. They are invulnerable to Putin’s manipulations. He may have his hand on the taps for oil and gas. But there is nothing he can do to stop the North Sea wind.’

Whilst such statements are welcome to the climate-conscious amongst us, they are controversial within the Tory party. A number of MPs, peers and the Net Zero Scrutiny group have challenged the green agenda by attempting to link the cost-of-living crisis with net-zero policies.

But Downing Street is reframing the debate by distancing renewable energy from the “culture wars”. Instead, they are aligning renewable energy with national security and levelling-up – essentially making the case for Britain to be self-sufficient whilst creating future-proofed jobs in the Red Wall and beyond. Not a bad pitch.

Unfortunately, as long as Johnson continues to – in the words of Keir Starmer – go “cap in hand from dictator to dictator” in search of oil and gas, the government’s attempt to reframe the debate on net-zero will fall flat.

Nightmare on Elm Street

What happened?

Chinese developer R&F properties have been forced to offload the Vauxhall Square site in Nine Elms for a nominal £1, taking a £62m loss on the project.

What does it mean?

Nine Elms is quickly becoming the undoing of Chinese property giants, with a growing list of developers running into trouble in the capitol.

In the first half of the decade, with David Cameron and Mayor Boris Johnson courting property investment, Chinese investors poured into the UK. The building projects were intended to serve as a home for a multitude of up-and-coming Chinese businesses, eager to establish their presence in London, and strengthen Anglo-Chinese ties.

However, the situation now, ten years on, paints quite a different picture.

China has been facing a domestic property crisis for several years now, which is only set to intensify this year as companies such as Evergrande face debt repayments. The R&F sale is the latest sign that these troubles are being felt beyond China’s borders, with UK real estate deals by mainland Chinese investors plunging by almost 88% in the past five years.

Real estate is just one area where a cooling in Anglo-Chinese relations has been felt. Huawei Technologies had pledged to invest £1.3bn to expand UK operations until the UK Government announced a ban on the technology, and the fate of China General Nuclear’s £20 billion stake in the Sizewell C nuclear plant in Suffolk remains uncertain.

At a time when UK businesses are desperately removing themselves from deals with Russian companies, a slowdown in Chinese investment probably isn’t a such bad thing.

The Death of Democracy in Myanmar

What happened?

A year after the military coup in Myanmar, the UN has issued its first comprehensive report concluding that the ongoing stream of violence being committed by the military junta amounts to war crimes.

What does it mean?

Myanmar has seen its fair share of atrocities and political false dawns.

The 2010 elections ushered in a new era of civilian government, leading to a decade of liberalisation led by Aung San Suu Kyi. The British-educated leader received international recognition for her policies allowing for greater civilian liberties, but this work was entirely undone after she failed to intervene in the genocide of Rohingya Muslims, carried out by the military.

Ms Suu Kyi was subsequently sidelined by the military who claimed ‘irregularities’ in the 2020 election. Soon after, she was overthrown in a move that has unsurprisingly led to the severe human rights abuses now being recognised by the UN.

Aung San Suu Kyi and Myanmar’s case shows, as Derek Mitchell, the former US Ambassador to Myanmar has put it, that the West should not ‘endow people with some iconic image beyond which is human’. Indeed, the multi-ethnic region has a complex history with leaders navigating a distinctly different political sphere.

So, while the reasons behind the terror may not yet be fully understood, the UN’s recognition of the horrific violence provides some much-needed perspective. In light of Russia’s invasion of Ukraine and the scenes we are witnessing in Myanmar, it’s about time we stopped judging leaders in burgeoning democracies by the extent to which they might liberalise markets for foreign capital. 

This Week’s Must Reads

1. “Culture war dwarfed by real clash of values” by James Marriott for The Times

2. “What happens when a major economy can’t pay its debts in dollars? Russia is about to show us” by Adam Tooze for The Guardian

3. “This endless torrent of scandals from the Met is destroying our trust in the police” by Michael Deacon for The Telegraph

4. “Volkswagen and China: the risks of relying on authoritarian states” by Joe Miller for the Financial Times

Chart of the Week

Source: The Centre for Prospective Studies and International Information via The Economist

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Under The Radar – 11 March

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This week we discuss:

1. Don’t Say DeSantis

2. Misogyny law: a meaningful step forward?

3. Energy crisis widens Tory cracks

Don’t Say DeSantis

What happened? Florida Governor Ron DeSantis has been embracing America’s culture war in a bid to position himself as a leading contender for the Republican nomination in 2024.

What does it mean?

Trumpist rhetoric and a polished image have seen DeSantis become a rising star in the Republican Party and the tag as an early frontrunner for a spot on the 2024 ticket. GOP voters have taken to DeSantis’ aversion to masks and public chastisement of those wearing them, as well as a string of other controversies. The Florida Governor currently polls second to Trump for the 2024 GOP candidacy. DeSantis is now in the spotlight once again for passing a law that it is being claimed marginalises LGBTQ+ people.

The ‘Don’t Say Gay’ bill, as it has been dubbed, has moved through the Republican dominated Florida senate for DeSantis to sign into law. The bill has garnered intense opposition from Democrats with President Biden branding the bill “hateful”. The bill aims to prevent classroom teaching on sexual orientation and gender identity from kindergarten through to third grade in a way that is not ‘age appropriate’ to students. Violations of these rules would enable parents to sue school districts.

Republican representatives have argued that these subjects should be introduced to children by their parents rather than teachers. Democrats are arguing that the language of the bill encourages an environment where teachers will avoid the subjects altogether. Disney, who were revealed to have donated to legislators passing the bill, have now involved themselves further with CEO Bob Chapek speaking to DeSantis to express his disappointment in how the law could be used to target LGBTQ+ children and families.

DeSantis’ ascent is symptomatic of a return to the populist battlegrounds of 2016 and 2020 with the Democrats unable to change the tide. Biden, or any successor as Democrat nominee, should buckle up for another culture war to fight come 2024.

Misogyny law: a meaningful step forward?

What happened?

The chair of the Misogyny and Criminal Justice in Scotland Working Group, Lady Helena Kennedy QC, has proposed a law in Scotland to crack down on experiences which “degrade women’s lives”. 

What does it mean?

Lady Kennedy has said she wants to use the law as a “tool for cultural change”, shifting the dial from a focus on the victims to those committing the offence. If passed, the act should set a precedent for change that will filter down throughout the UK.

The proposed law is aimed at tackling the everyday harassment, online hate and increase in ‘rape and disfigurement threats’ experienced by women across the country. It stems from a report produced by Lady Kennedy’s working group that recommends explicitly listing the daily abuses which women are exposed to through no choice of their own.

While the proposed Misogyny and Criminal Justice Act is a step in the right direction in terms of safeguarding women in public (and private), there are significant challenges which will need to be overcome for such an Act to be ratified into law.

The need for greater protections addressing the abuse against women in society is clear, however the wording of the legislation will inevitably cause a headache for lawmakers considering the strict constraints of interpreting statute in courts. The definition of misogyny is the ‘dislike of, contempt for, or ingrained prejudice against women’, all of which are arguably subjective to each woman.

Given the recent revelations over the misogynistic and sexist culture seemingly ingrained in police forces across the UK – with a particular nod to London’s Met Police – a complete overhaul of police culture is required for the Act to have its desired effect. Only then will women be empowered by the measures and secure in the knowledge that serious complaints will not be laughed out the station.

Energy crisis widens Tory cracks

What happened?

The cabinet appears divided over reports that the government is set to pursue projects in the North Sea to ease Britain’s energy crisis.

What does it mean?

Putin’s attack on Ukraine has fully exposed Europe’s reliance on Russian resources, wreaked havoc upon global energy markets and prompted a drastic reappraisal of European energy supplies. As nations scramble to find an alternative to Russian oil and gas, heads once again turn to the UK’s reserves in the North Sea.

The government’s expected commitment to six new oil and gas projects in the region will be welcomed by the right of the Conservative party, where notable individuals including Lord Frost have been particularly vocal on the benefits of British gas reserves in the campaign against Russia.

Certain members of the cabinet are becoming increasingly uneasy with the government’s sustained focus on net zero and hitting ambitious COP 26 targets, with one minister briefing that “the priority should be the cost of living – 2050 is a long way away, and our own gas is a valuable transition fuel in the meantime.”

Johnson’s own comments this week on the UK’s need to pursue ‘alternative sources of energy that are cheaper, … more reliable and less vulnerable to the whims of a dictator’, have raised concerns among politicians, experts and environmentalists alike that the government is pondering the return of fracking in the UK.

Such a decision will undoubtedly leave a bitter taste in the mouths of many Tory MPs, particularly those in Red Wall constituencies whose 2019 campaigns were built upon their opposition to the exploitation of shale gas reserves. Given the government’s suggestion is at odds with the IPCC’s latest and ‘bleakest’ warning yet of climate devastation, further widespread critique will surely follow.

The solution to Britain’s growing energy crisis is not yet clear. What is evident is that the Prime Minister has another political headache, one that risks entrenching even deeper divisions within his party.

This Week’s Must Reads

1. “The rising costs of China’s friendship with Russia” by Mitchell et al for the Financial Times

2. “Putin’s monstrous new fascism has destroyed the globalised world order” by Alistair Heath for the Daily Telegraph

3. “Nadhim Zahawi: how I escaped Saddam’s Iraq” by Nadhim Zahawi for the New Statesman

4. “Investors are terrible at forecasting wars” by Buttonwood for the Economist

Chart of the Week

Depicts the flow of Ukrainian refugees into neighbouring countries.

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Under The Radar – 4 March

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Source: Mika Baumeister on Unsplash

This week we discuss:

1. Kiwi parliament protests set alight

2. IPCC warn of climate risk to global supply chains

3. Is Beijing upping the ante in the South China Sea?

Kiwi parliament protests set alight

What happened? Riot police in New Zealand moved in on Wednesday to break up a three week long demonstration protesting vaccine mandates. Law enforcement officers were met with violence as protesters set tents and chairs alight in the grounds of the parliament in Wellington.

What does it mean?

The protests were highly organised with tents, food and portable toilets being brought in as activists got comfortable. Many protestors also came prepared for a fight; fire extinguishers and paint were among makeshift weaponry being used against police officers. 65 people were arrested. Jacinda Ardern, New Zealand’s Prime Minister, expressed disappointment in the violent scenes, decrying the desecration of the nation’s parliament.

New Zealand has had less than 100 deaths out of its population of five million from the virus. This is due to the government’s strict lockdown and border controls over the past two years. Around 77% of New Zealand’s population have received two doses of the vaccine so far with vaccine mandates being brought in to allow life to go back to normal for those who have accepted them.

Despite the stringent lockdowns, New Zealand is currently experiencing its largest outbreak since the beginning of the pandemic with 22,000 daily cases reported on Wednesday. The government may be finally willing to live with the virus with Ardern claiming she wants to ease restrictions and mandates soon. The violent scenes in the nation’s capital suggest for some this has come far too late.

Ardern has gone from being incredibly popular to a highly criticised figure, domestically, over her handling of the pandemic and these protests are evidence of that. While her initial response was swift and prevented the spread of the virus, the broader impact of being totally isolated from the world has been felt at home and especially among expat New Zealander’s trying but unable to get home while the rest of the world seemingly returns to normal.

IPCC warn of climate risk to global supply chains

What happened?

The UN’s Intergovernmental Panel on Climate Change has warned that global supply chains are at risk from the increasingly severe effects of climate change.

What does it mean?

Disruption to supply chains, initially as a result of the coronavirus pandemic, and now due to Russia’s invasion of Ukraine, have become the norm over recent years. However, a report by the UN’s Intergovernmental Panel on Climate Change (IPCC) has warned that climate-related events could cause widespread disruption on a scale not yet seen.

As the world warms, climate-related shocks will become more common and severe – with significant global ramifications. Floods and droughts are predicted to cause mass energy outages, with the combination of these events poised to wreak additional havoc on supply chains.

Over the years we have seen on a much smaller scale the impacts climate-related events can have on supply chains and prices. When wildfires devastated wheat supplies in Russia in 2010 and 2011, there was a global spike in food prices. Similarly, floods in Bangkok in 2011 that damaged manufacturing facilities produced knock-on effects for tech production in Silicon Valley.

Yet, if temperatures rise above the IPCC’s warning level, wildfires and floods on this scale are poised to become much more common and severe, along with the associated damage and destruction.

One-third of China’s manufacturing capability stands vulnerable to electricity supply disruptions due to floods and droughts, causing serious disruptions to global production chains. Electricity disruptions also stand to damage storage facilities for perishable goods, whereby decreased availability could cause a huge spike in the costs of fresh produce.

The report issues a warning to companies and governments to put in place risk management measures to limit the damage brought about by these climate events, but the appetite to spend seems to have waned with COP26 and its commitments seemingly forgotten.

Is Beijing upping the ante in the South China Sea?

What happened? Beijing’s race to map the South China Sea, in an attempt to shore up their claims in the region, has been exposed by an American Think Tank.

What does it mean?

According to data by AMTI, Chinese survey ships have been much more active in the region than was originally thought, with Chinese vessels being employed to detect deposits of oil and gas and hiding places for enemy submarines.

The Sea is of great strategic value as around $5trillion of international trade passes through the waters each year, including the oil that fuels China, Japan and South Korea. As such, several countries have made territorial claims to the South China Sea, including China, Taiwan, the Philippines and Vietnam, and it remains a serious point of contention among ASEAN members particularly.

In a further attempt to lay claim to area, China has been increasing their military presence for a number of years now. During the pandemic China announced new “research stations” in the region, which have since been transformed into stationary aircraft carriers, whilst satellite data shows newly developed runways and radars which are able to deploy offensive weapons.

The increased activity of Chinese vessels in the region is both symbolic and strategic. China is reasserting claims to the region and demonstrating their disregard of international opinion; in 2016 the Permanent Court of Arbitration in Hague struck down the country’s claims to certain reefs and rocks which are close to the Philippines. Strategically, the data obtained by Chinese research vessels enables them to gather intelligence on foreign military facilities and naval reconnaissance.

While unlikely that China will be deterred by the exposure of their recent activity in the South China Sea, they may think twice about further action given the unfolding situation in Ukraine and the West’s response to Russia’s invasion of another nation.

This Week’s Must Reads

1. “War in Ukraine: when political risks upturn commodity markets” by Emiko Terazono, Neil Hume and Nic Fildes for the Financial Times

2. “Merkel’s legacy is in ruins, and a good thing too” by Iain Martin for The Times

3. “China attempts to play peacemaker on Ukraine” by Katie Stallard for The New Statesman

4. “Why Vladimir Putin has already lost this war” by Yuval Noah Harari for The Guardian

Chart of the Week

Source: Bloomberg via Scott Galloway

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